What should you do if a supplier breaches a contract to supply goods or services? There are several steps you should take to protect your company’s interests. The first step we take when advising our clients in these situations is to establish clear goals on the outcome desired. Is this an important vendor who has simply missed a deadline, or is the performance on this contract critical to the success of your business? Is it important to preserve the underlying business relationship? Are you willing to provide more time or a slight increase in cost in order to complete the transaction?
At this point many clients are a bit caught off guard. “Why should we consider agreeing to a price increase, we aren’t the ones who breached the contract?” One must consider the time frame involved in business litigation, as well as the expense and interruption of business that may result. If the right answer is to take the case all the way to a Judge or jury we will. However, many times when a supplier breaches a contract there are other more expedient and less expensive options to resolve the situation and maximize profitability for our clients. Negotiation is an effective tactic, and once we’ve put them on notice that we intend to file a lawsuit and make a demand of the vendor they are often more disposed to negotiating a solution that is in our client’s favor.
The other consideration is your responsibility to mitigate the damages. California law requires a party to take prompt and reasoned action to reduce the amount of their losses as much as possible when the other party breaches a contract. At the Watkins Firm, our clients value our decades of experience and expertise in these matters, and the common sense approach we bring to resolving them. We work with our clients to establish clear goals, protect their financial and business interests and to resolve the breach as quickly and cost-effectively as possible.
If one of your suppliers or vendors breaches a contract we invite you to review the strong recommendations of our clients and contact the Watkins Firm or call us for a free and substantial consultation at 858-535-1511.